House File 881 - Introduced
HOUSE FILE
BY COMMITTEE ON WAYS AND MEANS
(SUCCESSOR TO HF 809)
(SUCCESSOR TO HF 246)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act establishing a tax credit certificate transfer program and
2 including a retroactive applicability provision.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. NEW SECTION. 15.411 SALE OR TRANSFER OF NET
1 2 OPERATING LOSS CARRYOVER.
1 3 1. As used in this section, unless the context otherwise
1 4 requires:
1 5 a. "Biotechnology enterprise" means the same as defined in
1 6 section 15E.202.
1 7 b. "Net operating loss" means the same as defined in
1 8 section 172 of the Internal Revenue Code. "Net operating
1 9 loss" shall not include a maximum salary allocation of more
1 10 than one hundred thirty percent of the average annual county
1 11 wage.
1 12 c. "Targeted industry business" means the same as defined
1 13 in section 15E.223.
1 14 2. The department of economic development, in consultation
1 15 with the department of revenue, shall establish and administer
1 16 a tax credit certificate transfer program for purposes of
1 17 allowing a biotechnology enterprise or a targeted industry
1 18 business located in Iowa with twenty=five or fewer employees
1 19 to transfer a tax credit certificate to another taxpayer in
1 20 return for private financial assistance for a net operating
1 21 loss carryover.
1 22 3. A biotechnology enterprise or a targeted industry
1 23 business with twenty=five or fewer employees that has a net
1 24 operating loss carryover in a single tax year may apply to the
1 25 department of economic development for the issuance of a tax
1 26 credit certificate in the amount of the loss carryover for
1 27 sale under this section to a qualifying, nonaffiliated
1 28 business. The department shall adopt an application deadline
1 29 by rule and shall approve or deny all applications within
1 30 ninety days of the application deadline. Upon the approval by
1 31 the department of economic development of an application, a
1 32 tax credit certificate shall be issued by the department of
1 33 revenue containing the taxpayer's name, address, tax
1 34 identification number, the amount of the tax credit, and other
1 35 information required by the department of revenue. The
2 1 proceeds from the sale of a tax credit shall be used by the
2 2 biotechnology enterprise or targeted industry business for
2 3 expenses including but not limited to the expenses of fixed
2 4 assets such as the acquisition, development, and construction
2 5 of real property, materials, salaries, and research and
2 6 development expenditures.
2 7 4. A taxpayer willing to enter into an agreement to
2 8 receive a tax credit certificate from a biotechnology
2 9 enterprise or a targeted industry business in exchange for
2 10 providing private financial assistance shall submit an
2 11 application to the department. The application to receive a
2 12 tax credit certificate shall identify the amount of private
2 13 financial assistance that the applicant is willing to provide
2 14 in exchange for a tax credit certificate.
2 15 5. For any tax year beginning on or after January 1, 2007,
2 16 a taxpayer willing to provide private financial assistance to
2 17 a biotechnology enterprise or targeted industry business in
2 18 exchange for a tax credit certificate may use the amount of
2 19 the tax credit transferred against the taxes imposed under
2 20 chapter 422, division II, III, or V, or chapter 432 for any
2 21 tax year the original transferor could have claimed the net
2 22 operating loss carryover. Any consideration received for the
2 23 transfer of the tax credit shall not be included as income
2 24 under chapter 422, division II, III, or V. Any consideration
2 25 paid for the transfer of a tax credit under this section shall
2 26 not be deducted from income under chapter 422, division II,
2 27 III, or V. Any tax credit in excess of the tax liability for
2 28 the tax year may be credited to the tax liability for the
2 29 following seven years or until depleted, whichever occurs
2 30 first.
2 31 6. The department of economic development, in consultation
2 32 with the department of revenue, shall adopt rules pursuant to
2 33 chapter 17A to establish the procedures for the application,
2 34 review, selection, issuance, and transfer of tax credit
2 35 certificates and to provide for the method to be used to
3 1 determine for which fiscal year the tax credits are available.
3 2 7. The department or a designee shall match applications
3 3 submitted under this section in a manner that can best
3 4 stimulate and encourage the extension of private financial
3 5 assistance to biotechnology enterprises or targeted industry
3 6 businesses in the state. As part of approving an application,
3 7 the department shall require all of the following from
3 8 applicants:
3 9 a. A written agreement concerning the terms and conditions
3 10 of providing private financial assistance in exchange for a
3 11 tax credit certificate issued pursuant to this section.
3 12 b. Private financial assistance supplied by a taxpayer
3 13 must be equal to at least seventy=five percent of the value of
3 14 the tax credit certificate issued pursuant to this section.
3 15 c. Private financial assistance received under this
3 16 section shall be used for the operation or expansion of a
3 17 biotechnology enterprise or a targeted industry business.
3 18 8. For the fiscal year beginning July 1, 2007, and each
3 19 fiscal year thereafter, the total amount of tax credits that
3 20 may be approved for a fiscal year under this section shall not
3 21 exceed two million dollars. A biotechnology enterprise or a
3 22 targeted industry business shall not receive more than two
3 23 hundred thousand dollars in any fiscal year of private
3 24 financial assistance under the program as a first=time award.
3 25 A biotechnology enterprise or a targeted industry business may
3 26 receive financial assistance under the program in subsequent
3 27 fiscal years. A biotechnology enterprise or a targeted
3 28 industry business shall not receive more than one hundred
3 29 fifty thousand dollars in a fiscal year as a second award of
3 30 financial assistance under the program. A biotechnology
3 31 enterprise or a targeted industry business shall not receive
3 32 more than one hundred thousand dollars in a fiscal year as a
3 33 third and final award of financial assistance under the
3 34 program. A biotechnology enterprise or a targeted industry
3 35 business shall not receive financial assistance under the
4 1 program in more than three fiscal years. Tax credits issued
4 2 under this section shall not be prorated.
4 3 9. A biotechnology enterprise or a targeted industry
4 4 business receiving private financial assistance under the
4 5 program shall not receive a wage=benefits tax credit under
4 6 section 15I.2.
4 7 Sec. 2. NEW SECTION. 422.11T BIOTECHNOLOGY ENTERPRISE OR
4 8 TARGETED INDUSTRY BUSINESS NET OPERATING LOSS TRANSFER TAX
4 9 CREDIT.
4 10 The taxes imposed under this division, less the credits
4 11 allowed under sections 422.12 and 422.12B, shall be reduced by
4 12 a biotechnology enterprise or targeted industry business net
4 13 operating loss transfer tax credit authorized pursuant to
4 14 section 15.411.
4 15 Sec. 3. Section 422.33, Code 2007, is amended by adding
4 16 the following new subsection:
4 17 NEW SUBSECTION. 24. The taxes imposed under this division
4 18 shall be reduced by a biotechnology enterprise or targeted
4 19 industry business net operating loss transfer tax credit
4 20 authorized pursuant to section 15.411.
4 21 Sec. 4. Section 422.60, Code 2007, is amended by adding
4 22 the following new subsection:
4 23 NEW SUBSECTION. 13. The taxes imposed under this division
4 24 shall be reduced by a biotechnology enterprise or targeted
4 25 industry business net operating loss transfer tax credit
4 26 authorized pursuant to section 15.411.
4 27 Sec. 5. NEW SECTION. 432.12J BIOTECHNOLOGY ENTERPRISE OR
4 28 TARGETED INDUSTRY BUSINESS NET OPERATING LOSS TRANSFER TAX
4 29 CREDIT.
4 30 The tax imposed under this chapter shall be reduced by a
4 31 biotechnology enterprise or targeted industry business net
4 32 operating loss transfer tax credit authorized pursuant to
4 33 section 15.411.
4 34 Sec. 6. Section 533.24, Code 2007, is amended by adding
4 35 the following new subsection:
5 1 NEW SUBSECTION. 11. The moneys and credits tax credit
5 2 imposed under this section shall be reduced by a biotechnology
5 3 enterprise or targeted industry business net operating loss
5 4 transfer tax credit authorized pursuant to section 15.411.
5 5 Sec. 7. RETROACTIVE APPLICABILITY. This Act is
5 6 retroactively applicable to January 1, 2007, and is applicable
5 7 on and after that date.
5 8 EXPLANATION
5 9 This bill establishes a tax credit certificate transfer
5 10 program.
5 11 The bill requires the department of economic development,
5 12 in consultation with the department of revenue, to establish
5 13 and administer a tax credit certificate transfer program for
5 14 purposes of allowing a biotechnology enterprise or a targeted
5 15 industry business located in Iowa with 25 or fewer employees
5 16 to transfer a tax credit certificate to another taxpayer in
5 17 return for private financial assistance for a net operating
5 18 loss carryover.
5 19 The bill allows a biotechnology enterprise or a targeted
5 20 industry business with 25 or fewer employees that has a net
5 21 operating loss carryover in a single tax year to apply to the
5 22 department of economic development for the issuance of a tax
5 23 credit certificate in the amount of the loss carryover for
5 24 sale under the bill to a qualifying, nonaffiliated business.
5 25 The bill provides that private financial assistance is to be
5 26 used for expenses including but not limited to the expenses of
5 27 fixed assets such as the acquisition, development, and
5 28 construction of real property, materials, salaries, and
5 29 research and development expenditures.
5 30 The bill requires that a taxpayer willing to provide
5 31 private financial assistance shall submit an application to
5 32 the department identifying the amount of private financial
5 33 assistance that the applicant is willing to provide.
5 34 The bill provides that, for any tax year beginning on or
5 35 after January 1, 2007, tax credits transferred under the
6 1 program may be used against personal and corporate income
6 2 taxes, against the franchise tax for financial institutions,
6 3 against the insurance premium tax, and against the moneys and
6 4 credit for credit unions. The bill provides that any
6 5 consideration received for the transfer of a tax credit shall
6 6 not be considered income and any consideration paid for the
6 7 transfer shall not be deducted from income. The bill allows
6 8 any tax credit in excess of the tax liability for the tax year
6 9 to be credited to the tax liability for the following seven
6 10 years or until depleted, whichever occurs first.
6 11 The bill requires the department to match applications
6 12 submitted under the program in a manner that can best
6 13 stimulate and encourage the extension of private financial
6 14 assistance in the state.
6 15 The bill provides that the total amount of tax credits that
6 16 may be approved for transfer under the program for the fiscal
6 17 year 2007=2008, and every fiscal year thereafter, shall not
6 18 exceed $2 million. The bill provides that a biotechnology
6 19 enterprise or a targeted industry business shall not receive
6 20 more than $200,000 in financial assistance as a first=time
6 21 award under the program. The bill provides that a
6 22 biotechnology enterprise or a targeted industry business shall
6 23 not receive more than $150,000 in a fiscal year as a
6 24 second=time award of financial assistance under the program.
6 25 The bill provides that a biotechnology enterprise or a
6 26 targeted industry business shall not receive more than
6 27 $100,000 in a fiscal year as a third=time and final award of
6 28 financial assistance under the program. The bill prohibits a
6 29 biotechnology enterprise or a targeted industry business from
6 30 receiving financial assistance under the program in more than
6 31 three fiscal years.
6 32 The bill prohibits a biotechnology enterprise or a targeted
6 33 industry business that receives private financial assistance
6 34 under the program from receiving a wage=benefits tax credit
6 35 under Code section 15I.2.
7 1 The bill is retroactively applicable to January 1, 2007.
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